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Application of Employee Empowerment Culture and Penetration Pricing Theories - Admission/Application Essay Example

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The paper "Application of Employee Empowerment Culture and Penetration Pricing Theories" highlights that the strategy of penetration pricing is majorly used by new market entrants to acquire a market share or grab customers from the existing competitors…
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Application of Employee Empowerment Culture and Penetration Pricing Theories
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Subject: Case Analysis on Application of Employee Empowerment Culture and Penetration Pricing Theories
Thank you for according me the opportunity to contribute positively to the company. As per your request, I have examined the existing management practices and evaluated the need of shifting from the existing human resource and marketing practices to employee empowerment and penetration pricing strategies respectively. My analysis has used recent events in South-west Airlines and Wal-mart as case scenarios to help in understanding how the proposed strategies would enhance the company’s management. Wal-mart has been selected on the basis of its exemplary success in using low prices to penetrate new markets in the discount stores industry while South-west Airlines is used on the basis of its unique human resource practices which are centered on empowering employees to achieve high performance levels.
Penetration pricing strategy: A case of Wal-mart
In a recent Wall Street Journal article, Wal-mart which is the world’s largest discount store has devised strategies to turn round the declining sales especially in the U.S. market. One of the major strategies includes a return to the popular practice of “Every Day Low Prices” lowest which aims at offering the lowest market price (Bustillo, 2011). Over the last few years, Wal-mart had diverted from its tradition of offering the lowest prices especially when penetrating new markets in favor of the practice of giving discounts on certain items and raising the prices of other items.
The strategy of penetration pricing is majorly used by new market entrants to acquire a market share or grab customers from the existing competitors. Wal-mart employs a unique penetration pricing strategy. Whereas only about 20% of its products are priced lower in relation to the competitor prices, Wal-mart has succeeded in creating a lasting impression of low prices in the minds of its customers (Zenith consulting.com.0).
As a result of penetration pricing strategy, Wal-mart has achieved great success. Wal-mart has succeeded in penetrating many foreign markets and overcoming competition. Currently Wal-mart operates over 10,000 stores and Sam’s clubs in 28 countries with an employee base of more than 2 million and customer base of over 176 million annually (walmartstores.com).
A move towards employee empowerment: a case of Southwest Airlines
Having the most skilled employees in the company is not enough in managing human resources. Recent studies on human resource practices have established that it is equally important to establish an organizational culture that motivates employees to make them more productive (Flamholtz and Randle, 2011).
Southwest Airlines uses a unique employee empowerment program that keeps employees happy in order to achieve the company’s success. The level of empowerment exists at all levels within the organization. In one instance, a gate supervisor in response to the question on why Southwest Airlines is different from other airlines replied “we’re empowered to make on-the-spot decisions. For example, if a customer misses a flight, it’s no sweat; we have the latitude to take care of the problem. There is no need for approvals” (Jackson, Schuler and Werner, 2011). p. 12).
Decisions at Southwest Airlines are made on the principle that by letting all employees appreciate the company’s mission and values, the decision making process will serve the best interests of customers and employees (Flamholtz and Randle, 2011). Southwest Airline’s employees are also empowered financially through profit sharing arrangements and by being allowed to own shares in the company.
As a result of employee empowerment, Southwest Airlines has achieved a lot of success. The company has managed to remain profitable in the midst of economic downturns and operate without disruptions through employee strikes which are frequently observed in other airlines.
Recommendations
Based on the analysis of Wal-mart’s penetration pricing, I recommend that our company can employ a low price strategy. This will allow building of customer loyalty in new markets and create a sizeable market share. The company can also apply employee empowerment strategy in managing its human resources in order to increase employee productivity. Alternatively our company can also use motivation theory in managing human resources.
References
Zenith Consulting (n.d). Wal-Mart Strategy. Retrieved January 26, 2012 from http://www.zenith-consulting.com/research/Wal-Mart/Wal-Mart-Strategy.pdf
Walmart Corporate. Retrieved January 26, 2012 from http://walmartstores.com/AboutUs/
Bustillo, M. (2011). With sales flabby, Wal-mart turns to its core. Wall Street Journal, March21, 2011. Retrieved January 26, 2012 from http://online.wsj.com/article/SB10001424052748703328404576207161692001774.html
Flamholtz, E. & Randle, Y. (2011). Corporate Culture: The Ultimate Strategic Asset. Stanford: Stanford University Press.
Jackson, S., Schuler, R. S. & Werner, S. (2011). Managing Human Resources (Ed.11). New York: Cengage Learning Read More
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